IPhone Maker Hon Hai’s April Sales Rise 19% in Positive Signal
High voltage cobalt-free cathode Li-ion batteries during a Hon Hai Precision Industry Co. event in Taipei
(Bloomberg) — Hon Hai Precision Industry Co. posted strong growth in April sales, potentially raising expectations for iPhone sales while AI-related business booms.
The company, which assembles the majority of Apple Inc.’s smartphones, reported a 19% rise in monthly sales to NT$510.9 billion ($15.8 billion), compared with revenue of NT$429.2 billion in April 2023. It said in a statement Sunday that April revenue climbed to a record for the month.
Hon Hai, known also as Foxconn, makes most of the world’s iPhones but is diversifying to put greater focus on building datacenter server racks and other equipment for artificial intelligence clusters. That’s helped its stock reach a record high this year.
Still, with Apple’s business making up more than half of revenue, investors are watching the Taiwanese company for clues on iPhone sales. It posted a near-10% plunge in first-quarterly revenue in part because Apple’s flagship device underperformed.
The second-quarter remains a traditional off-peak season, and major products are entering a period of transition between old and new products, Hon Hai said in the statement. The visibility for the second quarter is approximately in line with current market expectations, with operations outlook for the period expected to show both quarter-on-quarter and year-on-year growth, according to the statement.
Apple on Thursday surprised investors with a decent beat on quarterly revenue from China, defying a plethora of negative data points on iPhone sales. That discrepancy could be due to differences in the way independent analysts account for the business, or higher average sales prices than anticipated.
Investors scrutinize the company’s performance in China because of its role as both a huge market and global iPhone production base.
What Bloomberg Intelligence Says
Hon Hai may face hurdles boosting its iPhone-related revenue in 2024 given 1Q’s downbeat demand and the swirl of unknowns clouding the broader picture. Despite being the iPhone’s largest producer, Hon Hai’s margins may be at increased risk from diminished scale economies within the iPhone business, and the steady capacity relocation to India.
– Steven Tseng, analyst
Click here for the research.
In the current period, Apple expects sales to climb by a percentage in the low single digits. The company predicted that both its iPad and services business would grow by double-digits, though it declined to give a forecast for the iPhone.
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